Dr. Pushpendra Bhardwaj

Wednesday, October 12, 2011

It is well said that history is being known only because somebody had wrote about it. But what I think that writing about something is easy but the art of writing it with some morals and by infinite views is the only Writer who is a pillar of culture, religion, tradition and so on. Writer is a person who gives a picture of not only what happened but also give a mirror of the whole environment as a whole for a particular thing. Imagine if writers of ancient times, just had been wrote a basic speech which they had observed, then how could one know about the person’s expression, feeling, looks, surroundings, principles, tradition, learning’s and many more.

Mythologies are been written by a writer, due to which an artist can even make a idol of that person by reading that mythology. My father says to me that whenever god took a birth on earth, he or she had brought writers with him from Heaven. So what I think Writers are one of the most respectful person on earth.

Tradition festivals which the various societies or religion had is been celebrated or followed with principles, because the writers of those days (when the birth of tradition or Festivals or principles to follow tradition) who had written all about it from the infinite views.

Writers shows and gives a true picture of History, Present, Past, Future. Writers are the inventions and discoveries of God, and a gift to our Mother Earth as well as to Human Beings.

Tuesday, May 17, 2011

Most of the discussions on the Reserve Bank of India’s (RBI) ‘Discussion Paper’ on deregulating the interest rate paid by banks on savings deposits have focused on the micro level; on what deregulation could mean for individual savers and borrowers.

There has been virtually no discussion on what deregulation could mean for the safety and stability of banks. Yet, the final verdict on whether this is the right time for deregulation hinges critically on the second rather than the first.

As far as the impact on individual savers and borrowers is concerned, opinion is unanimous that deregulation will spell the death-knell of the present system of a uniform, administered rate that bears little relation to underlying demand-supply conditions.

Not only will rates be more market-related, they will also vary from bank to bank, depending on each bank’s needs and strategy. To the extent rates will move up and down, as with any market-related rates, for savers there is trade-off between an assured (if low) rate of return and one that could, theoretically at least, be almost as volatile as the stock market.

So, in situations of tight liquidity, savings bank depositors could see the interest rate on their deposits go up and when liquidity is plentiful, rates could fall, other things remaining constant. The problem is liquidity is not only a function of borrowers’ demand for funds; it is also a function of the central bank’s management of liquidity.

So, in situations like in most of 2009 and 2010, when the RBI chooses to keep the system flush with liquidity, interest rates might not reflect the true supply-demand imbalance. Consequently, there is no certainty that deregulating rates will necessarily give savers a better deal.

But yes, to the extent the savings bank (SB) deposits interest rate is the only regulated rate and has remained unchanged at 3.5% since March 1, 2003 even as the RBI’s policy rates have moved up and down over time, there can be no case for continuing with an administered interest rate. Moreover, savings deposits account for about 13% of financial savings of the household sector. Presumably, deregulation will improve monetary transmission.

In the present context, it will raise both real and nominal rates. It will also encourage product innovation as banks will try to compete, not only on rates, but also on product design as, for instance, by offering differentiated rates depending on the size of the deposit (something they are not allowed to do at present).

International experience too suggests there are gains to be had from deregulation. In Hong Kong, for instance, interest rate deregulation increased the efficacy of monetary policy by improving the correlation between retail bank deposit rates and market interest rates. Besides, savings rates are not regulated in developed markets (though there are usually strict limits on the number of transactions permitted).

Thus, the theoretical arguments for deregulation are sound. What is less clear is whether these gains, both at the micro and at the macro level, will be outweighed by the fallout of deregulation on the composition of banks’ deposits.

Will the resultant volatility in savings bank deposits (that constitute a significant part of a bank’s 'core' deposits) increase the vulnerability of banks, given their relatively large exposure to long-term loans? The reality is many banks have used short-term funds like savings deposits to make long-term loans, confident in the belief that these are 'core deposits' that will not be withdrawn.

Never mind that, on paper, these are deposits that can be withdrawn on demand. That belief was not without basis in a scenario where a low and uniform rate of interest made savers 'lazy'. But deregulation could change that. Once banks begin to compete for funds based on interest rates, these deposits lose their ‘core’ element. This could jeopardise the safety of banks by widening the maturity mismatch between their assets and liabilities. The discussion paper does raise this issue but is confident the downside is limited.

But with savings bank deposits accounting for 22% of total deposits of scheduled commercial banks, we could be skating on thin ice. Deregulating the SB interest rate could see substantial swings in savings bank deposits in individual banks in response to interest rate changes. Banks will be hard put to determine what is ‘core’ and can be used to make long-term loans and what is ‘fleeting’ and not to be lent for longterm purposes.

It is significant that the share of term loans has increased during the period 2000-09 even as the share of term deposits has come down, suggesting maturity mismatches have widened during this period. The ball is, therefore, in the RBI’s court. As banking sector regulator, if it feels the fallout in terms of maturity mismatches will not derail banks, it should go ahead. But not unless it is very sure! Else it should bide its time.

Sunday, May 1, 2011

I have a grouse against some science and mathematics teachers. More often than not, they’ve left me cold with a sense of foreboding. I am dead against typecasting people. But feel compelled to write this because I suffered at the hands of some teachers who at the outset talked of the difficulties and not of joy.

Only the other day, I met a couple of senior mathematic teachers and was mighty relieved I don’t have to sit in their class. These gentlemen teach at schools and also coach kids for the big IIT exam and other engineering entrance tests that every kid in town wants to crack.

One of them held out this particularly dark prospect. “Practice, practice, practice. The key lies in practice,” his voice rang out – eyebrows corrugated, not a trace of a smile on his face as he almost threatened to put kids through a wringer to make them IIT-ready.

“Study 12-14 hours a day from day one and you won’t have problems. Don’t do that and you’re in serious trouble,” he droned. A clutch of students sitting in a firing squad straight line heard him in silence – eyes wide shut, jaws dropping.

He made it very clear that his drill was for the IIT exams. The plus 2 syllabus wasn’t his bother. “Do all that at home.” What about the joy of learning? Sorry, you’ve got the wrong address.

Frankly, I can’t blame this guy for being the way he is. He’s out in the market and has a success potion to sell. Given the crowd of enthusiastic young faces at his doorsteps, he must be mighty good at stuffing his smart recipe down eager gullets.

“Classes begin at 6.30am and end at 9.30am, that’s when I get ready for work. Teaching is a passion and I love it when my students leap over the IIT hurdle…It’s the toughest test to clear and needs dedication,” he says. The teacher’s magic tuitions come at a pretty steep price and he cautions: “Come to me only if you mean business. Don’t waste your parents’ money.”

Numbed by the master’s sternness, I stepped out on the pavement and gulped in the evening air. Many years ago, an equally stern mathematics teacher had humiliated me and shut me out from learning the numbers saying: “Go. Ask your parents to buy you a watermelon. You are good for pulling rickshaws.” This was after I had scored a zero in a class test.

He had left me with a steely resolve to succeed despite not knowing how to put two and two together. Later, when I picked up arts, they told me I was no good and had taken the girlie-girlie way. Science was the man thing. Bug guys with brains became engineers and doctors. Commerce was just another option. BComs are buddhi com (dimwit), they scoffed. Never mind if CAs and finance wizards commanded the big pay packets in the jobs bazaar.

No disrespect meant, but I never could see wisdom in cramming my head off and believing nothing else exists just for an examination, which might be as tough to crack as IIT. Also, I didn’t see sense in seeing non-IIT, non-science, non-mathematics graduates as lesser mortals short on grey matter.

The moot lesson life taught me was that doing anything well was difficult. To be among the best anywhere needs sincerity and dedication. A good BA is just as valued as a good BTech or an excellent MBBS. You are a dud if you have a medical degree and say I don’t know much about the heart. It wasn’t important, wasn’t expecting questions from that chapter, so I skipped it. Haven’t we met engineers who get flummoxed when asked to fix a broken fuse?

Attack, every wily general and accomplished coach would affirm, is the best form of defence.

So why did Jose Mourinho opt for a highly defensive, almost brutal, game in the Champions League semifinal against Barcelona earlier this week? Especially, when he had the means and resources to play equally attackingfootball?

In one stroke, he reduced the Galacticos to a sad caricature; he demolished the great legacy of Real Madrid in those 90 minutes and even turned the beautiful game into an ugly brawl. Worse, he lost 0-2.

But then, Mourinho's philosophy has always been the same: victory at any cost. It didn't matter how much money he had at his fingertips or how much talent in the dugout; he simply devised strategies to win matches. They are not meant to win hearts.

On the face of it, it was a fair ploy: Barcelona are too sublime to be stopped; give them space and they will build castles around you. They come in waves, each more enthralling and compelling than the other. Many times, even the opposition wants to just sit and enjoy them.

Mourinho clearly wasn't into scoring on Wednesday night; he was more interested in not conceding the away goal. He believed Barcelona could be put under pressure, maybe even beaten, this way in the reverse leg; isn't that how he had anyway outmanoeuvred them in the last game and earned a draw in the previous one too?

The crafty strategist forgot one little thing: Lionel Messi. The Argentine, for the most part, looks disinterested during a game; it's almost like he is in a park, out for a walk. Hand him a ball and he suddenly comes to life; with tiny, almost impossible to catch steps, he darts past defenders.

The ball, almost magically, stays glued to his feet until he is ready to pass it or to deliver the final blow. Real Madrid made the mistake of not watching him in the 76th minute; in the 87th minute, they could do nothing but watch as he outwitted four of them, plus the goalkeeper.

Mourinho probably realized that he just couldn't stop Messi; so he decided to stop the entire Barca side. Hustling, attacking, pushing and pulling, his seven-strong defence did everything to disrupt Barcelona's rhythm, their ballet with the ball. It worked for the most part.

The only problem was that Pep Guardiola was prepared this time: he too employed the same aggressive stratagem, even allowing his boys to resort to theatrics. Almost everyone fell at the merest of touches, screamed in agony and made Real look uglier than they really were.

Ronaldo simply didn't have a chance; there was hardly scope for a counter-attack anyway.

On Wednesday night, inevitably, Mourinho was probably the most hated figure in football. But even in defeat, well after the match was over, the Portuguese played a final card: he accused UEFA, the referees and indeed the world of helping Barcelona in these high-profile games.

It may not give him the two goals needed in the away game later this week; but it will surely not be easy to show Real the red card there; it will be even more difficult to look beyond the fouls of Barca's players either. Sadly for him, he doesn't have a choice now: he has to attack from the word go.

Last weekend the DRI made a startling revelation. It alleged that many of the dazzling new cars you and I see on the roads today, like Aston Martins, Bentleys, Rolls Royces, Ferraris, Lamborghinis and the most obnoxious of all, the Hummer, a car banned in many parts of the world for its gross gas guzzling, are stolen in Europe and smuggled in. Our politicians, businessmen and movie stars who buy them as bargain deals from illegal agents will soon be quizzed on who they bought the cars from and how they paid for them. It's a good sign. It demonstrates that even the most privileged are not beyond the arm of the law.

But this column is not about how the rich and mighty drive fancy stolen cars. It's about something more fundamental. How a brand new bunch of cars, legally or illegally bought, are challenging our existing caste system and trying to create a new one. Look around you on the streets of our cities, where you once saw only two kinds of cars, the Ambassador and the Fiat, and later the Maruti. You will be dazzled by the brands whizzing past. Some of them are among the world's best. Aston Martin has just introduced the One-77 for Rs 20 crore. It is the ultimate statement for rich Indians now determined to break into the new club. Luxury brands have successfully sold them the idea that the quickest entry lies in acquiring the latest and most fashionable cars, yachts or executive jets. This new caste system, unlike the traditional one, has less to do with the accident of birth or a surname. It's more about who you are and want to be. It's based on the belief that in today's world, money makes the new Brahmin.

Car brands are the new badge of caste in Mumbai. In Delhi it's property. Where you live, Jorbagh or Moti Bagh, Golf Links or Defence Colony, East or West Nizamuddin makes you who you are, as does the size of the land you occupy. Is it a 400 square yard property or a 1200 determines your status, your upbringing, your market value and who you can wed or bed. Curiously, just as the caste system works differently in different parts of India, the land size differentiator doesn't work in a vertical city like Mumbai where the best flats come in tall buildings on kerchief sized plots. Here, the caste system works on the premise of which neighbourhood you live in and, yes, the building. It's not about the size of your apartment. It's about who your neighbours are, the demographics of the locality, and, once again, the brands parked in the basement. Some of the new properties are now being branded. So you have apartments designed by Philippe Stark in Pune and Jade Jagger in suburban Mumbai. Trump has arrived in SoBo. While Tarun Tahiliani is making branded Goa homes, marked up 200 per cent.

Strangely, this snootiness doesn't work for all brands. Anyone can walk in and buy a LV or a Chanel at MRP without feeling intimidated. Many actually do. Middle class buyers buy the most expensive brands today at weddings to impress the other side and be seen as coming from a higher brand caste than they actually do. That's why weddings leave families with debt that takes decades to clear. Stuff that no one buys under normal circumstances, like Rolexes, Hayabusas and Kilgour French Stanbury suits, are bought during the wedding season, to impress the other side. Also, a whole lot of money is spent to position the newly wed couple in the fluid caste hierarchy and the choice of brands is what helps them do so. Those who cannot afford the real stuff, catch a quick flight to Bangkok or Guangzhou.

Does that mean the old caste system is vanishing? Perish the thought. It's only being overlaid with new, overarching brand hierarchies. So you see couples who might eventually settle into a tiny two bedroom apartment in a remote suburb checking into the Four Seasons for the wedding and the suhaag raat. Will Quintessentially replace the Moranis to organise the special events? I have no clue. Maybe it will. The best way to check it out would have been to ask them for invites to the Royal Wedding. Pippa Middleton's amazing posterior was the main draw, claim British media. But middle class India was actually looking admiringly at the pomp and splendour, and the Sarah Burton gown Kate wore, wondering if it can all be replicated here in a Mehrauli farmhouse. For the ultimate purpose of an Indian wedding is the same as that of a brand. It allows you that one magic moment to be snooty. After all, the slightly raised nose, those quivering lips, a supercilious glance, the look of disdain, the tone of snobbishness in the voice, a condescending look-- these are the hallmarks of having arrived. In any society. And India will not be left behind.

Silver prices have run up on buying from all sectors. What started as catch on rally to gold has led to one way frenzy in the white metal. The Prices have run up from $39 to $49 in one single run and in Indian markets from Rs 42000 to Rs 73000 in pretty much the same way, gaining a surprising rs 1000 to 2000 pre kg on most days in month of april.

There is shortage of physical silver in global markets. There have been reports from various mints of insufficient supplies. US mint has been quoting several weeks of waiting period of for delivery. US also has reported of coins selling at premium of near 10%.

The Indian physical market also is facing a crunch after prices hit all time high above Rs 73000 / kg. The traders cite a waiting period in Indian markets of near 2 weeks with a premium quoted of 2-3%. And the traditional Indian sweets have the silver foil on them missing! But not all silver shops are showing profit.

Indian investors this time around are not going for silver showpieces or cutlery as has been the cast till couple of years back. This time it is strictly coins and bars which have seen a strong uptick in demand.

Talk to couple of jewelers in Zaveri bazaar Mumbai, and they will tell you how retailers are buying small quantities on weekly basis , and housewives coming in to sell gold to buy silver as everybody is talking about silver inching to Rs 1 lakh per kg by this year end.

But there is caution as well at these current levels, as silver is technically overbought on the charts. The gold-silver ratio is at decades low. And the market has history of collapses after sharp spikes that move too fast too soon. Last time silver touched $50 in 1970 it has fallen to $12 in 8 weeks !

There is lot of speculation on iShares holdings, on whether it does hold the amount of silver it claims it does. As for every share that gets bought , the trust has to back it up with equal amount of physical silver. But is there that much easily available?

The panic demand or the rush to make money in silver has taken prices up because if you look at the genuine demand supply figures as compared to 2010 or 2009, nothing justifies a 60% jump in 4 months. The industrial demand , fabrication industry or the ornamental demand for jewelry ,coins , silverware has not run up significantly.

But the investment demand has run up on this relatively low priced commodity. The weak USD, now at 3 year lows Vs major 6 world currencies has led to money flowing into precious metals. The safe haven buying due to geopolitical crisis in middle east and Africa also has made the case stronger for investment in Silver.

Thursday, June 24, 2010

After the World Cup, austerity measures is the biggest talking point in Europe. Greece has already been shackled, Spain, Italy, etc, are getting there. Germany, which doesn’t need to, is starting. Britain will, by June 22, outline savage cuts in its emergency budget. Sigh.

Almost every politician in Europe, from Angela Merkel to David Cameron, is now firmly committed to the fundamental wisdom of cutting government spending as of yesterday, to reduce government budget deficits, which, in turn, might — or might not — keep those ditsy market types from going berserker every time a bond issue moves a percentage point or so.

It’s utterly boring to be pushed back in time, when words like austerity measures rang like screeching sirens through every alternate Doordarshan broadcast. Some days, I really wonder what I’m doing here in a back to the '70s show.It is, please note, a completely different kind of animal from the Indian government’s Budget deficit, the fuel and fertiliser and other subsidies. I don’t have detailed numbers for the rest of Europe, but in the UK, government, or what you’d call the public sector, accounts for, according to multiple sources, almost 50% of the economy.

So, when that government decides it’s going cold turkey, there’s a serious reason to worry. Over the past few weeks, dozens of guru types have been almost writing Europe off, predicting double-dip recessions and, at best, a long period of pain.

Forget the headline GDP forecasts. I’m no economist, but having bought that Tshirt and grown up in it, I can pretty much predict what austerity measures will feel like. It will feel exactly like living in a recession, in other words, being poor. Jobs will be hard to find, disposable incomes will fall, and everyone will be even more grumpy than usual. Which brings me to a strange issue. In this roaring debate, I’ve heard little about where growth is supposed to come from, to make up for the shrinking public sector. All these projections are based on a fundamental assumption: Europe has no demand, period.

The growth-led recovery advocates — they are few — assume that without a massive increase in trade, there’s no growth to be had at home. Everyone’s rushing to emerging markets, instead.

To me, that looks like another of those gospel truths, that go kaput in time. If, really , there is no consumer demand or growth in European domestic markets, why exactly is UK’s household debt bigger than its GDP? Obviously, everyone was borrowing money to spend on something. Yes, because funds were cheap, they didn’t scrutinise every purchasing decision or price with a magnifying glass. But they did want those clothes, holidays, homes, furnishings, cars, medicines, insurance, et al. Just because cheap finance has evaporated doesn’t mean demand has. But European consumers, like their Indian brethren, have become fussy about what they’re going to buy, and at what price.But is anyone restructuring their product or service offerings to address this new value-conscious consumer? No.

Despite, the repeated success of budget business models such as Primark and RyanAir, European business seems stuck in some time high-cost , high-value time warp. Most of my conversations go like: what’s your outlook for European markets? Oh, they’re dead, no growth. Says who? Oh, all the forecasts, based on even more complex assumptions. Right. Innovation, when it’s even mentioned, is almost always associated with very hi-tech stuff that involves even more high-cost R&D ; not basic business practices.

Take a small example. Newspapers are dead, yes? Everyone knows that. Media conglomerates have gone all out in investing zillions on technology, to capture that digital space. Meanwhile, the venerable old Evening Standard, reeling from humongous losses, was bought up by a Russian tycoon for £1 some time ago. It started selling a full-service paper free, distributed at every nook and corner, focused in London. Guess what? Last I heard, they’re making money. Not hand over fist, but enough to protect jobs and give the lie to conventional media business wisdom.

Or take property, perhaps the single sector that has the biggest impact on these economies. I find it impossible to reconcile, in UK at least, the current housing debate . On one hand, everyone is moaning about how property prices are stagnant, falling, and hitting a bust cycle. On the other, they’re moaning about how nobody can afford to buy a home, the huge shortage in housing stock — and I’m not talking only like welfare housing here. What’s particularly weird is that everyone expects the government to solve this problem, i.e., build more affordable housing.

Why aren’t a bunch of companies out there all over UK building like crazy? There’s got to be something fundamentally wrong in a system where there’s so much pent-up demand, but it doesn’t , for whatever reason, translate into a profitable opportunity for the private sector.

I think it’s high time someone gave European consumers — and demand — a break. Instead of squeezing them with austerity measures on one side, and dumping high-cost goods and services on them from the other, it might actually help to produce what they really want to — and can afford — to buy.